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PNG - Pinnacle Point - Proposed Recapitalisation Of Pinnacle And Renewal Of
Cautionary Announcement
PINNACLE POINT GROUP LIMITED
(Formerly Acc-Ross Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2000/000059/06)
Share code: PNG ISIN: ZAE000127122
("Pinnacle Point" or "the company")
PROPOSED RECAPITALISATION OF PINNACLE AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the various cautionary announcements on SENS on 17
March 2009, 28 April 2009, 10 June 2009 and 29 June 2009 respectively, in which
shareholders were advised that Pinnacle had entered into negotiations which, if
successfully concluded, may have a material effect on the price of Pinnacle`s
securities.
Shareholders are also referred to Pinnacle`s results for the year ended 28
February 2009, which were released on 30 June 2009. These results had been
reviewed by the Group`s auditors, Deloitte & Touche, who qualified their review
opinion on the basis of going concern considerations. In addition, shareholders
were advised that Pinnacle was in negotiations with key stakeholders, including
lenders, with regard to the recapitalisation of Pinnacle and the restructuring
of Pinnacle`s existing debt.
In this regard, the Pinnacle Board is of the view that the company requires
additional capital in the amount of R250 million to enable Pinnacle meet its
working capital requirements and to allow the company to realise the potential
of its property assets as a going concern.
Shareholders are advised that Pinnacle has concluded an agreement with Absa Bank
Limited ("Absa"), a material shareholder in Pinnacle, in terms of which Absa has
agreed to provide funding of R220 million to Pinnacle on the basis as set out
below.
Absa will underwrite R150 million of a proposed rights issue of R250 million at
a price to be determined. In addition hereto, Absa also undertakes to convert
its current debt facility of R70 million into capital at the same price as the
rights issue price, provided that the rights issue is successful. The
underwriting of the rights issue is conditional upon the following key
conditions being met by 31 October 2009.
- At least R100 million of the R250 million that Pinnacle intends to raise as
part of the rights issue, must be raised from new or existing investors
other than Absa.
- The existing shareholders loan of $5 million from Goldbanc Management
Associates Limited (GMA) must be converted into equity at the same price
per share as is agreed for the rights issue. This converted capital will
be in addition to the R250 million mentioned above and will be converted in
terms of the rights issue.
- The Voting Pool agreement entered into by major shareholders is to be
terminated.
- The rights issue implementation being unconditional.
A formal terms announcement providing details of the rights issue will be made
in due course.
In order to enable Pinnacle to continue trading until such time as the rights
issue has been successfully concluded, Absa has agreed to provide a further
bridging debt facility of R55 million to the company, subject to certain
conditions being met on 6 August 2009. This R55 million will, provided that the
rights issue is successful, form part of the rights issue.
In the view of the Pinnacle Board a rights issue of R250 million as envisaged
above, will be successfully executed as it has reasonable grounds to expect that
the conditions for the rights issue will be met. The board holds this view due
to the following:
- The irrevocable financial support by Absa to inject, if required, R150
million of new equity together with the capitalisation of R70 million of
debt into equity in terms of the rights issue, provides a critical underpin
to the rights issue;
- The company has recently secured definitive land rights to the Lagos Keys
development in Nigeria;
- GMA a major shareholder in Pinnacle is likely to agree to the conversion of
the $5 million loan, which will bring the total commitment, together with
Absa, to increase the share capital by R260 million; and
- Pinnacle is in discussions with its major shareholders and interested
parties to take up R100 million of the rights issue, which will bring the
total capital raised to approximately R360 million.
Accordingly, shareholders are advised to continue to exercise caution until a
further announcement is made on or about 6 August 2009.
Johannesburg
31 July 2009
Designated Advisor
Arcay Moela Sponsors (Proprietary) Limited
Date: 03/08/2009 07:05:10 Produced by the JSE SENS Department.
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